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Macy's (M) Strategic Efforts Bode Well: Should You Hold?
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Shares of Macy's, Inc. (M - Free Report) have declined 19.5% in the past one month, underperforming the Zacks categorized Retail-Regional Departmental Stores industry which has witnessed a decrease of 11.3% in the same time frame.
Macy’s dwindling top and bottom-line results remain the primary concern. A look at the company’s performance in fiscal 2015 unveils that net sales declined 0.7%, 2.6%, 5.2% and 5.3% in the first, second, third and fourth quarters, respectively. Maintaining the same chronological order, we note that earnings per share fell 6.7%, 20%, 8.2% and 14.3%, respectively. In fiscal 2016, net sales decreased 7.4%, 3.9% and 4.2% in the first, second and third quarters, while earnings per share plunged 28.6%, 15.6% and 69.6% during the respective quarters.
Macy’s operates in the highly competitive retail merchandise sector. Moreover, we remain concerned about the company’s low pricing power as against other discount chains, which may in turn hurt the company’s market share.
Nevertheless, we believe this Zacks Rank #3 (Hold) company’s sustained focus on price optimization, inventory management, merchandise planning, and private label offering are the primary catalysts. These factors facilitate in meeting customer-oriented demand and improving in-store shopping experience. In an attempt to increase sales, profitability and cash flows, the company has been taking steps such as integration of operations as well as developing eCommerce business and online order fulfillment centers. Going forward, management remains optimistic of capturing sales opportunities with its fresh inventory along with My Macy's localization initiatives, omnichannel integration and Magic Selling.
The company has been widening its operations through deals and collaborations to increase its customer base. The company entered into an agreement with The Men’s Wearhouse, Inc. to open licensed tuxedo rental shops within its stores. A similar deal was inked with Best Buy as well. Macy’s also announced that it has entered into a joint venture (JV) with Fung Retailing Limited – one of the leading retailers in Greater China – in an attempt to tap into retailing opportunities in the fast-growing Chinese markets. Macy's holds a 65% stake in the JV, which is called Macy’s China Limited.
Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.
PriceSmart has a long-term earnings growth rate of 15%.
Ross Stores delivered an average positive earnings surprise of 5% in the trailing four quarters and has a long-term earnings growth rate of 11.4%.
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Macy's (M) Strategic Efforts Bode Well: Should You Hold?
Shares of Macy's, Inc. (M - Free Report) have declined 19.5% in the past one month, underperforming the Zacks categorized Retail-Regional Departmental Stores industry which has witnessed a decrease of 11.3% in the same time frame.
Macy’s dwindling top and bottom-line results remain the primary concern. A look at the company’s performance in fiscal 2015 unveils that net sales declined 0.7%, 2.6%, 5.2% and 5.3% in the first, second, third and fourth quarters, respectively. Maintaining the same chronological order, we note that earnings per share fell 6.7%, 20%, 8.2% and 14.3%, respectively. In fiscal 2016, net sales decreased 7.4%, 3.9% and 4.2% in the first, second and third quarters, while earnings per share plunged 28.6%, 15.6% and 69.6% during the respective quarters.
Macy’s operates in the highly competitive retail merchandise sector. Moreover, we remain concerned about the company’s low pricing power as against other discount chains, which may in turn hurt the company’s market share.
Nevertheless, we believe this Zacks Rank #3 (Hold) company’s sustained focus on price optimization, inventory management, merchandise planning, and private label offering are the primary catalysts. These factors facilitate in meeting customer-oriented demand and improving in-store shopping experience. In an attempt to increase sales, profitability and cash flows, the company has been taking steps such as integration of operations as well as developing eCommerce business and online order fulfillment centers. Going forward, management remains optimistic of capturing sales opportunities with its fresh inventory along with My Macy's localization initiatives, omnichannel integration and Magic Selling.
The company has been widening its operations through deals and collaborations to increase its customer base. The company entered into an agreement with The Men’s Wearhouse, Inc. to open licensed tuxedo rental shops within its stores. A similar deal was inked with Best Buy as well. Macy’s also announced that it has entered into a joint venture (JV) with Fung Retailing Limited – one of the leading retailers in Greater China – in an attempt to tap into retailing opportunities in the fast-growing Chinese markets. Macy's holds a 65% stake in the JV, which is called Macy’s China Limited.
Other Stocks to Consider
Investors may consider better-ranked stocks such as Burlington Stores, Inc. (BURL - Free Report) flaunting a Zacks Rank #1 (Strong Buy), while PriceSmart, Inc. (PSMT - Free Report) and Ross Stores, Inc. (ROST - Free Report) both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.
PriceSmart has a long-term earnings growth rate of 15%.
Ross Stores delivered an average positive earnings surprise of 5% in the trailing four quarters and has a long-term earnings growth rate of 11.4%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>